Correlation Between Burning Rock and Volitionrx

Can any of the company-specific risk be diversified away by investing in both Burning Rock and Volitionrx at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Burning Rock and Volitionrx into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Burning Rock Biotech and Volitionrx, you can compare the effects of market volatilities on Burning Rock and Volitionrx and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Burning Rock with a short position of Volitionrx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burning Rock and Volitionrx.

Diversification Opportunities for Burning Rock and Volitionrx

0.57

Correlation Coefficient

Burning Rock  Volitionrx

Very weak diversification

The 3 months correlation between Burning and Volitionrx is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Burning Rock Biotech and Volitionrx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volitionrx and Burning Rock is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Burning Rock Biotech are associated (or correlated) with Volitionrx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volitionrx has no effect on the direction of Burning Rock i.e., Burning Rock and Volitionrx go up and down completely randomly.

Pair Corralation between Burning Rock and Volitionrx

Considering the 90-day investment horizon Burning Rock Biotech is expected to under-perform the Volitionrx. In addition to that, Burning Rock is 1.3 times more volatile than Volitionrx. It trades about -0.1 of its total potential returns per unit of risk. Volitionrx is currently generating about -0.03 per unit of volatility. If you would invest  63.00  in Volitionrx on December 30, 2024 and sell it today you would lose (8.00) from holding Volitionrx or give up 12.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Burning Rock Biotech  vs.  Volitionrx

Burning Rock Biotech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Burning Rock Biotech has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Volitionrx

Risk-Adjusted Performance

Very Weak

Over the last 90 days Volitionrx has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Burning Rock and Volitionrx

The main advantage of trading using opposite Burning Rock and Volitionrx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burning Rock position performs unexpectedly, Volitionrx can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Volitionrx will offset losses from the drop in Volitionrx's long position.

The idea behind Burning Rock Biotech and Volitionrx pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.